Implantica AG

to Implantica's Q3 investor presentation. And I guess you know me by now, but I have invested lots of money and effort in this company, and this is actually the second round of implant business. So I will try to give you a very quick overview of Implantica before I come to the business update for any new listener. But I will try to do it very fast. So first of all, Implantica has two platform technologies. We have an e-health platform and a wireless energizing platform. And with these two, we can revolutionize health care and we can do many nice products. And we can control people's health from distance. And we can also change treatment from distance. Completely unique feature. And based on that, we have then gone through the whole body and tried to make patent applications. And we have many patents. pipeline products in this company. We have enough pipeline to become a really, really large company. And for example, the e-health platform is covered by 25,000 pages of patent filing. So it's an enormous work to protect this for the future. And that's why We have a very shy vision in this company. We should become the world leader in smart medical implants. And I just give you two products as an example. People who have a stoma, they have taken away their large intestine, for example, and they have a plastic bag where they collect the fecal matter on outside of their abdominal wall. The business just for plastic bags are $3 billion. People don't need that plastic bags anymore. We make reservoir, open close, artificial swinter, everything ready to go. And people don't need anything with a plastic bag. They just need our remote control. Second, people who can't urinate. This is not so fun because they normally put in a catheter in their own bladder and five times per day. Every time they should urinate, they need to introduce a catheter in their own bladder. And I can tell you when you have introduced this catheter in your bladder once, you have done a real achievement, I can tell you. These people only need the remote control after we launch our product. They could urinate without any hassle because we have an internal device to handle the problem. If we then go further on, our main product is of course reflux stop. This is a device, an implant that is used in the treatment field of one billion sufferers. So it's the largest treatment field in the world, even larger than obesity. And here you see the device at the end of our special instrument we use to introduce it into the body. And the existing surgical methods today, they have all been focusing on compressing or closing, supporting the closing of the sphincter and muscle ring sphincter here who sits between the stomach and esophagus. And that's, of course, because acid should not come up. It's very logical that you should support the closing. The problem is that when you do that, you get swallowing problems. You can't belch. You can get nothing up anymore. And you get so-called gas bloating because you can press gas down with your food and saliva, but nothing comes up and you get bloated and distended. So these surgeries also doesn't treat acid reflux very well because you cannot compress so much. You will get enough treatment overall. So with reflux stop, we realized what actually causes acid reflux and therefore we were able to make a treatment without affecting the foot passageway. So we treat acid reflux much better and we do it without all the side effects you have with existing surgery. And you can see here that basically it works like this, that in the chest you are breathing and therefore pressure is coming and going. Imagine pressure in, pressure out, pressure in, pressure out. And this poor swinter here, if this comes too close here, you can imagine how it's leaking out through the hole you have in the diaphragm here for esophagus. It's leaking out pressure variations. And this is affecting this poor winter, so it gets completely paralyzed. It can't work anymore. And you get acid reflux. So by restoring the normal anatomy in a good position, far away from the diaphragm, placing our device on the outside of the stomach in a little sutured pouch and some other sophisticated sutures, you need to treat all three components of the anti-reflux barrier. Suddenly... you have no reflex anymore. And it's the body itself we treat. It's not the device. We are just giving the body the natural position and the right circumstances, basically. And then the body treats itself. So what should you then more know about this treatment field? You should know that the drugs taken today, they are dangerous. It's a large U.S. study to follow for 10 years, 157,000 U.S. veterans and one out of 20 extra deaths due to this drug, PPI. That's incredibly bad. And the problem is that people die from... cardiovascular disease or kidney disease or cancer. And no one says, OK, this guy died from a heart attack. Of course, it's because of his PPI. No one understands this until someone suddenly do a large study like this. And they have then afterwards gone through and analyzed why are people getting heart attack? We got a PPI. And the answer is that you take a something called nitric nitric oxide in the blood vessel and this goes away by this treatment, and therefore you open up for arteriosclerosis. So your blood vessels get older. You get like a, you can be a middle-aged man, but suddenly you have blood vessels like you are an old man. And that's why you die from heart attack when you have PPI use. So this was the four main reason for death. cardiovascular disease, chronic kidney disease, you wipe out your kidney, cancer, infection and parasites because you have no protection of acid anymore. Normally you eat food, you have acid in your stomach and that protects you from shit you get when you eat. But not now because the acid is gone. So people don't understand this. It's really, that's why I repeat it over and over again. This is not fun for the patients. We have also in this area, 48,000 people in US and Europe alone die from esophageal adenocarcinoma, also cancer in your esophagus. And we know that acid that comes up in esophagus that comes over and over and over again. It burns, it makes ulcers, it sterilizes, it makes inflammation of your poor esophagus. And this is exactly how you get precancerous changes. So if I take an endoscope and put down in any patient, I just take randomly a patient with acid reflux and I put down an endoscope and look, 10 to 20% have precancerous changes. We have a huge study where they have gone into registry in Sweden when they look at all people who died from esophageal adenocarcinoma. And what do they find? 38% take PPI. So of the people who died from this cancer, 38% was eating PPI at the time of death. That's a warning alarm bell ringing here. So suddenly I will go over to the business update. And first of all, of course, you are interested to find out how is it progressing with FDA? Very interesting question. Well motivated. First of all, we have passed not less than four FDA pre-approval inspections. Or we hope we have passed. Anyhow, we had one team of two inspectors coming to one of our study hospitals. And they have gone through every single data point. They have turned any stone on the data. And they have compared the data in the computer system with the data in the patient's journal. And you can imagine two people for five days. asking questions like a machine gun it's enormous work to supply an audit and inspections like this mirror inspections than audit maybe with all the things they need you know it's really heavy to really handle an inspection like this. Then they came the week after unannounced to Implantica's facilities. So another two people and one was the same and one new inspector from FDA. And they took the same study and they went through every single data point, every single, you know, study details, all the documentation, everything. Two people again asking questions for five days. And so it's, we had a working hour of 120 hours that week to just supply the answers to all the questions. And both these meetings, there was a closing meeting where FDA, we sit together with FDA and they reported results. And both these closing meetings presented with no observations. And that's good for our study and our approval process. Furthermore, we had two more inspections. One was again at Implantica's place, but this time to go through our quality system. You know, as a medical device company, you have rigorous paperwork to control every step, everything you do, everything is controlled. It's very advanced, lots of paperwork. And they ended up this inspection only with minor observation. There were a few observations, but nothing of importance since we will answer within two weeks. Finally, the next week, they went to our production facilities, Freudenberg in Germany. They inspected all the production, how it's going, all the paperwork at this company or their quality system. And even here were only minor observations that will be responded within a few weeks as well. So this is quite promising for our hopefully upcoming FDA approval. Regarding the overall feedback from FDA, you remember we received the feedback on Module 3, the last and final module, and we also received feedback on our answers to Module 2. And basically you can say that the answer on Module 2, they were focused on post-approval study. That's to say every product implant like this in the United States, when you get approval, you are forced to do a post-approval study so after you can sell your product and so on and that's done parallel to selling the product but you need to do a post-approval study and all things were focused on how this post-approval study should look like what you should analyze and and so on and then we had some other stuff regarding the the module three and you know the This application, PMA, it's called to FDA. That's a very heavy, heavy work. And it's lots, lots of parameters. And a normal investor doesn't understand why is it not a specific timeline? Can't you just say when it's ready here and then it's ready here? It's impossible. It's an absolutely impossible. It's a huge, huge animal and parameter change. So when we supplied, for example, now some test results here, suddenly FDA has decided that they want to use another way of presenting these results. And it's not published by FDA. No one knows. But FDA just tells us, no, we have changed our mind. Now we want another way of presenting this, another test. And suddenly it's just a redo. This is how life in this particular case, we were lucky enough that this is just short term and it will quickly be done, but it's just for your understanding. It's not like you have all the rules lined up is that this, this, this, this, this, and we know the timing. No, it's a very complex, very, very, very, very advanced, uh, work to handle this. So the 100-day meeting we had with FDA, there we could clarify exactly what do they now want more from us to give us the approval. And there was no All requirements are for us now clear what we need to do to have the final approval. And they are also all addressable as we see it. We couldn't see anything that was any hurdle for this approval. It's just a little bit more time and soon we will now file the final response. So another good news is that actually our main device competitor is withdrawing from all market except US. So this is, of course, fantastic for us. They say it's for commercial reasons. At the same time, we noticed that there is published results from US largest user. It's called Lynx. It's a trademark of Torax. They published results here that is not so favorable for this product. It's actually very unfavorable that it has results. large frequency of swallowing difficulties with up to 30% need to be do dilatation, metal dilatation of ballon dilatation, and also lots of remaining swallowing difficulties, dysphagia swallowing difficulties. So it's basically very unfavorable results, but we don't know if it has anything to do with this or if it has to do with that reflux stop is superior treatment, but most likely it's simply that they say there is a commercial reason, not business enough for them to continue. But that's very, very favorable, of course, for reflux stop. And not only that, we have also suddenly compared to the existing market today. Today, you know, it's a certain number of reflux surgeries done, and that is compressed a lot because the existing treatment has so many side effects. So therefore the number of surgeries is absolute to a minimum. But on top of that, the whole market for reflux stop is suddenly 10 times larger than for links. And for any other treatment available, and that's because something called IEM sufferers. So when people have acid reflux for a long time, the muscles and the nerve ends in esophagus get damaged and the food transportation gets worse. They have no strong food transportation down in esophagus anymore. And then you can imagine you take the existing methods and try to close down atesophagus. That means you have your weak food transportation and suddenly you have a stop down and you get unbearable solar difficulties. It doesn't work. So, but reflux doctor doesn't affect the food passageway could suddenly be used in these IEM patients. And they are around half of all the reflux patients, but they are in a group with very severe sufferers. It's likely around 10 times more candidates for surgery in that half than in the half that is operated today. And this is further supported now by NICE. So NHS who stands for the healthcare in UK, they have an organization NICE to help to evaluate new technology and analyze, look at all the data and so on. And after their very thorough review of reflux stop, they ended up to say, yes, we allow reflux stop in NHS public hospitals for IEM patients. That means for half of the sufferers and the severe sufferers and NHS patients. nice, they have influence all over the world. We have U.S. investors calling us and want to invest because they have read about nice guidelines and so on. So this is a very influential and very, very positive. And this, of course, then opens up the possibility for the U.S. market. Suddenly the U.S. market is tenfold larger than before. We are preparing for launch in U.S. We are heavily preparing for launch in U.S. One part of that is that we have built two new production tools so we can produce more units more quickly. And also we can place one tool in U.S. so we can have production both in U.S. and in Europe. And currently we are building 10,000 reflux stop units to be prepared for the U.S. launch. Also, we are doing lots of activities to strengthen our case here in the US. And we have a fantastic market momentum among top US experts for the moment. And in the latest American forego society, that is basically an association of all doctors who treats the patient with reflux. And we had a fantastic meeting. We had our lunch symposium, and it was many different lunch symposium, but everybody went basically to our booth. We had 120 doctors attending. And it was a fantastic event. And also, Professor Schottman presented new data, up to seven-year data, in mean two years, from 22 European centers has pooled their data together. And he presented that in this American Fogot Society. And he had the biggest room available there. And it was really a huge interest, a fantastic interest from U.S. surgeons. So we are getting there. Also, we had a fantastic reception. Lots of comments in our booth we had here regarding the five-year data that was published in Surgical Endoscopy. You know, Surgical Endoscopy is a magazine from Sages. Sages is part of the guideline course. society to recommend guidelines for the U.S. market. And their magazine, they published our two articles about 5G results. And exceptional reception. Previous meetings we had in the U.S., it's always some surgeons who question, is this really good? This time, no question. Now it was more the question, why is it so good? Why is it working so much better than anything else? So we have come very, very far with the U.S. surgeons. And I can just show you. It's an easy parameter to just understand how good treatment you get with reflux stop. In this case, it's our pivotal study. And you can see that everybody took, of course, drugs before surgery. They had acid reflux. They took PPI drugs. Five years after surgery, it's one patient, one single patient take drugs after five years. This is an absolutely exceptional result. There is nowhere in the literature to find anything even close as it's total superior. And not only that, you can take the literature, you can look everywhere on the different articles from different centers that do this in real world, real life. And here I took one example. It's an article from Germany in Friedrichshafen, 79 patients. And he had 94.9% of the patients took PPI before surgery and 2.5% after surgery. The same fantastic results in just normal standard health care. Next step, robotic surgery with reflux stop. This is the new trend. Maybe you are aware of it. It becomes more and more robotic surgery, more and more advanced surgery. Here you see some pictures of a reflux stop surgery with robotic surgery. And why is this interesting? Yes, it's interesting because in the United States, 60% do robotic surgery. There will be lots of robotic surgery with reflux top in United States. And that is really nice because they also have a fantastic video streaming system. So we can sit here in Europe even, and we can guide the surgeons and have a live streaming of the surgery. We can communicate and talk with each other and fantastic way of keeping control of the training process. So. We are targeting, we have more than 100 centers, way more than 100 centers who wants to start, but we will target 25 plus 25 centers initially. And we need to be very careful to train people really, really well. And why is the situation so good in the United States? Yes, because we have a research article that has been published that show that reflux stop is the most cost-effective acid reflux treatment. It's more cost-effective than any other treatment. So it's an economic gain here to operate the reflux stop compared to the other treatments. That's a really good platform for U.S. expansion. I have lots of things to say about US, but I could not talk too long in this presentation here. This is another advantage of the US approval is that suddenly it opens up market like Japan, Canada, Brazil, who very much look at the US approval. So in Canada, for example, they said US approval is enough for us and so on. So this is getting further expansion. And for you to see how we systematically, building a business like this is like building a house. You start with the ground, you make a very solid ground and you build up from the bottom. The same with the clinical data. The clinical data is the door opener for everything. Today, we have 27 published or accepted bannerscripts. It's like a snowball effect. We have 14 waiting to be sent in or be approved or reviewed. It's like you put a snowball on top of a mountain in the warm weather and it's just expanding and expanding and expanding. We have a full team just doing this. And this is really, really important for the future to handle this. Then I'll leave the word for Andreas to talk about the finance update.

Many thanks, Peter. Good afternoon or good morning. Net sales for the third quarter amounted to €365,000. This represented an increase of 6% compared to the same period last year. As a reminder, Implantka is currently only marketing the lead product reflux top to European key opinion leaders to support the ongoing reimbursement build-out. Adjusted gross margin for the third quarter amounted to 93%, down from 97% the same period last year. The business consistently achieves exceptional gross margins, underpinned by simple product design, best-in-class patient outcomes, as demonstrated by the long-term clinical data Peter presented, and a big competitive moat thanks to robust IP. Our third quarter operating loss amounted to 4.4 million euro, a 17% year-on-year decrease, For the nine months, operating loss decreased by 28%, reflecting company-wide cost discipline and a decrease in FDA-related expenses. Let's switch slide and turn to cash. Operating cash flow decreased 32% to 3.3 million euro compared to the same quarter last year. For the nine months, operating cash outflows decreased by 34% to €11.7 million underpinned by disciplined cost management. At the end of September, we held €53.3 million of cash and short-term investments. The investments on our balance sheet are simple fixed-term deposits with a leading A plus rated Swiss bank. Therefore, we carry no direct financial market risk exposure. There is no interest bearing debt in our capital structure. So let me sum up this slide by saying we have a solid financial position. Next slide, please. Our investor base is dominated by Swedish and Swiss high quality institutions. And we are grateful for the trust and support we're receiving to ensure that GERD sufferers globally are getting access to the best available treatment at scale. Back to you, Peter.

Thank you. Then I think it's time to open questions and answers.